Between student loans and credit card debt, Laurie-Anne King found herself in a $45,000 hole shortly after getting married and combining finances with her husband.
The debt caused some tension in her relationship.
“We were facing months where we weren’t sure how we were going to pay all of our bills, and my husband was so unhappy with this,” King told Insider.
Having never learned exactly how debt works, “for me, it was kind of normal,” she said. “I didn’t grow up with a lot of financial literacy, so I didn’t really understand what the big deal was until he explained how interest works — how it’s either working for you or against you.”
In the case of debt, interest is almost always working against you. It continues to accrue over the course of your loan, which causes your balance to keep growing and, ultimately, can keep you in debt longer.
When King grasped just how costly carrying an outstanding balance could be, she committed to improving her situation immediately.
“I was able to get out of debt pretty quickly once I accepted that I was in debt and it needed to change,” she said. Within a year of getting married, she was debt-free, according to documents viewed by Insider. She did it thanks to a new budget and a mindset shift, plus a bit of luck: “I got, in a sense, fortunate. We were in a car accident and received an insurance settlement that helped pay off about half the debt.”
Today, as a co-founder of the financial education platform Dow Janes, King helps thousands of other women tackle their debt so they can start to invest and build long-term wealth. The crux of the debt-payoff strategy she and her co-founder Britt Baker teach in their financial literacy course is what they call the “aligned money method.”
Rather than focusing on cutting back and sacrificing certain things in order to become debt-free, this approach is centered around spending money that aligns with your values.
In order to do that, you first have to understand your values and what you want your future to look like.
Start by asking yourself: “How do you actually want your life to run and to work?” said King. Then, think about how money plays a role in that vision. “Money is a huge factor in what we’re able to do. It influences everything from the type of food we eat to how much time we get to spend with our children, so really having the clarity of what it is you’re actually aiming for is where this methodology starts.”
To figure out what you want your future to look like, you have to understand what’s important to you and what you value in life. Maybe it’s working for yourself or buying a home for your family or gaining new experiences by traveling.
Once you have an idea of what you want your life to look like, you can start working towards getting out of debt and achieving your goals. That requires looking at your numbers: How much of your paycheck are you saving? And how much do you need to save to get out of debt? How much of your paycheck are you spending? And where are you spending your money?
“From that place, you can create a budget that still honors your personal values, and you’ll be focused on spending better instead of just spending less,” said King. It’s all about spending money that aligns with your values, and cutting back everywhere else.
King’s strategy is similar to personal finance expert Ramit Sethi’s “money dials” philosophy. There are 10 “money dials,” which are essentially spending categories like travel, health, and experiences, that you can either tune up or down. Sethi encourages everyone to look at them and think about which ones get you excited. Then, cut back in areas you don’t care about and spend without guilt in areas that bring you joy.
Saving money doesn’t have to mean living a life of deprivation or isolation. Rather, it’s about being clear on what you value, spending comfortably and intentionally on those things, and then cutting out everything else.
When their clients start doing this, King and Baker have found that “people end up saving way more money than they were saving before, while also doing things they didn’t think they could do before.”
Plus, it’ll be much easier to stick with your budget if you give yourself room to spend some of your hard-earned money.
The aligned money method “doesn’t require you to sacrifice or make all of these trade-offs in the short- term for a hopeful future payout,” said King. “You feel better now while also doing better for your future self.”
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